Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2018

Summary of assets measured at fair value on a recurring basis

For assets and liabilities measured at fair value on a recurring basis, quantitative disclosures about the fair value measurements for each major category of assets and liabilities follow:



(Dollars in thousands)	Quoted Prices In Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total
June 30, 2018
Investment securities – carried at fair value:
Government and government-sponsored agencies	$	—	$	235,083	$	—	$	235,083
State and political subdivisions	—		445,080		—		445,080
Residential mortgage-backed securities	—		179,794		—		179,794
Collateralized mortgage obligations	—		1,384,232		—		1,384,232
Corporate bonds	—		249,536		—		249,536
Trust preferred securities	—		36,185		—		36,185
Total investment securities – carried at fair value	—		2,529,910		—		2,529,910
Loans held-for-sale	—		46,849		—		46,849
Loan servicing rights	—		—		70,364		70,364
Derivative assets:
Customer-initiated derivatives	—		18,275		—		18,275
Interest rate lock commitments	—		1,985		—		1,985
Power Equity CD	—		1,310		—		1,310
Risk management derivatives	—		17,618		—		17,618
Total derivatives	—		39,188		—		39,188
Total assets at fair value	$	—	$	2,615,947	$	70,364	$	2,686,311
Derivative liabilities:
Customer-initiated derivatives	$	—	$	18,672	$	—	$	18,672
Forward contracts related to mortgage loans to be delivered for sale	—		425		—		425
Power Equity CD	—		1,310		—		1,310
Total derivatives	—		20,407		—		20,407
Total liabilities at fair value	$	—	$	20,407	$	—	$	20,407
December 31, 2017
Investment securities – available-for-sale:
Government and government-sponsored agencies	$	—	$	202,916	$	—	$	202,916
State and political subdivisions	—		345,970		—		345,970
Residential mortgage-backed securities	—		150,131		—		150,131
Collateralized mortgage obligations	—		1,033,845		—		1,033,845
Corporate bonds	—		192,794		—		192,794
Trust preferred securities	—		36,066		—		36,066
Preferred stock	—		1,824		—		1,824
Total investment securities – available-for-sale	—		1,963,546		—		1,963,546
Loans held-for-sale	—		52,133		—		52,133
Loan servicing rights	—		—		63,841		63,841
Derivative assets:
Customer-initiated derivatives	—		9,376		—		9,376
Interest rate lock commitments	—		1,222		—		1,222
Power Equity CD	—		2,184		—		2,184
Risk management derivatives	—		5,899		—		5,899
Total derivatives	—		18,681		—		18,681
Total assets at fair value	$	—	$	2,034,360	$	63,841	$	2,098,201
Derivative liabilities:
Customer-initiated derivatives	$	—	$	10,139	$	—	$	10,139
Forward contracts related to mortgage loans to be delivered for sale	—		34		—		34
Power Equity CD	—		2,184		—		2,184
Total derivatives	—		12,357		—		12,357
Total liabilities at fair value	$	—	$	12,357	$	—	$	12,357

Summary of changes in Level 3 assets measured at fair value on a recurring basis

The following table summarizes the changes in Level 3 assets measured at fair value on a recurring basis.



	Three Months Ended June 30,						Six Months Ended June 30,
	2018			2017			2018		2017
(Dollars in thousands)	Loan servicing rights
Balance, beginning of period	$	68,837		$	64,604		$	63,841	$	48,085
Transfer in based on new accounting policy election⁽¹⁾	—			—			—		15,891
Gains (losses):
Recorded in earnings (realized):
Recorded in "Net gain on sale of loans and other mortgage banking revenue"	(757		)	(2,466		)	2,272		(3,591		)
New originations	2,284			2,384			4,251		4,137
Balance, end of period	$	70,364		$	64,522		$	70,364	$	64,522


⁽¹⁾	Refer to Note 1, Basis of Presentation and Significant Accounting Policies, for further details.

Schedule of aggregate fair value contractual balance and gain (loss) for loans held-for-sale

The aggregate fair value, contractual balance (including accrued interest), and gain or loss for loans held-for-sale carried at fair value option was as follows:



(Dollars in thousands)	June 30, 2018		December 31, 2017
Aggregate fair value	$	46,849	$	52,133
Contractual balance	45,529		50,597
Unrealized gain (loss)	1,320		1,536

Amount of gains (losses) from loans held for sale included in the Consolidated Statements of Income

The total amount of gains (losses) from loans held-for-sale included in the Consolidated Statements of Income were as follows:



	Three Months Ended June 30,				Six Months Ended June 30,
(Dollars in thousands)	2018		2017		2018			2017
Interest income⁽¹⁾	$	445	$	463	$	821		$	1,014
Change in fair value⁽²⁾	484		787		(216		)	1,388
Net gain on sales of loans⁽²⁾	4,023		13,905		5,531			20,025
Total included in earnings	$	4,952	$	15,155	$	6,136		$	22,427


⁽¹⁾	Included in "Interest and fees on loans" in the Consolidated Statements of Income.


⁽²⁾	Included in "Net gain on sale of loans and other mortgage banking revenue" in the Consolidated Statements of Income.

Summary of assets measured at fair value on a nonrecurring basis

For assets measured at fair value on a nonrecurring basis, quantitative disclosures about fair value measurements for each major category of assets follows:



(Dollars in thousands)	Significant Unobservable Inputs (Level 3)
June 30, 2018
Impaired loans	$	50,394
Other real estate and repossessed assets	1,687
Total	$	52,081
December 31, 2017
Impaired loans	$	70,619
Other real estate and repossessed assets	2,899
Total	$	73,518

Additional information about significant unobservable inputs used in the fair value measurement of financial assets

The following table presents additional information about the significant unobservable inputs used in the fair value measurement of financial assets measured on a nonrecurring basis that were categorized within the Level 3 of the fair value hierarchy:



(Dollars in thousands)	Fair Value at June 30, 2018		Valuation Technique	Significant Unobservable Inputs	Range
Impaired loans	$	50,394	Appraisal of collateral	Discount for type of collateral and age of appraisal	20%-30%
Other real estate and repossessed assets	1,687		Appraisal of property	Discount for type of property and age of appraisal	20%-30%

Summary of carrying amounts and estimated fair values of the financial instruments

A summary of carrying amounts and estimated fair values of the Corporation’s financial instruments not recorded at fair value in their entirety on a recurring basis on the Consolidated Statements of Financial Position are disclosed in the table below.



	Level in Fair Value Measurement Hierarchy	June 30, 2018				December 31, 2017
(Dollars in thousands)	Level in Fair Value Measurement Hierarchy	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Financial assets:
Investment securities:
Held-to-maturity	Level 2	$	602,187	$	591,873	$	676,593	$	662,516
Held-to-maturity	Level 3	500		425		500		390
Net loans⁽¹⁾	Level 3	14,479,678		14,082,333		14,063,380		14,114,545
Financial liabilities:
Time deposits	Level 2	$	3,878,686	$	3,844,389	$	3,217,207	$	3,225,847
Collateralized customer deposits	Level 2	378,938		378,134		415,236		415,236
Short-term borrowings	Level 2	2,095,000		2,094,567		2,000,000		1,999,137
Long-term borrowings	Level 2	330,956		328,495		372,882		367,984


⁽¹⁾	Included $50.4 million and $70.6 million of impaired loans recorded at fair value on a nonrecurring basis at June 30, 2018 and December 31, 2017, respectively.